Mastering FSBOs – Chapter 9

Mastering Hard to Sell Homes (FSBOs That Have Sat on the Market)

When I first started in real estate, I made a good living chasing FSBOs. I would call them, ask what price they were asking for their home, and see if I could sell it for more money on the MLS. Because the market was so hot, I was able to sell a lot of homes and net the former FSBO more money in their pocket.

To be honest with you, I was terrible back then at getting price reductions. I got the FSBOs to list with me because I had promised them a higher price and now I was telling them that I couldn’t sell their property for that price anymore. I was scared to tell them the truth.

I thought that if I did tell them that their house wasn’t worth what I had originally promised them, that they would fire me and try to sell FSBO again. Today, I get sellers that aren’t really motivated to reduce their price to where the home sells. I recently had a seller that wanted to sell his home but was not very motivated.

Gainesville is a college town, and he had bought the home for his son to live in while the son went to school. The father was the decision maker, and so I dealt with him almost exclusively.

He lived in Miami, and we did everything by phone. He responded to my FSBO letter, and we listed the home. He listed for $189,900 with the former agent from Fall 2006 to Spring 2007.

I listed the home high in the beginning at $184,900. It’s hard to get a seller to reality over the phone versus in person.

His motivation was this. His son wouldn’t graduate college until the spring of 2008.

But the father didn’t want the son to have to stay in Gainesville to look after the home when he did graduate.

That is why they put the house on the market. It was so the son could rent an apartment his last year and move out of town right away when he graduated.

So, if the home did not sell until my listing expired the end of August 2007, he would still have plenty more time to sell.

Here is what I did to get this seller to sell his home before my listing expired.

First, I called him every week with an update on the activity on the home. This was to build rapport and keep him happy as a seller. Within a month he began to realize that the price needed to be reduced. But, he still waited about three weeks to reduce it.

Then, we sat on the market for another month, and I started talking to him every week about reducing the price.

This guy was a hard sell. First, he had low motivation and second he was stubborn about the price. We had to reduce the price three times. Finally, we got one offer that he rejected, and then another offer two weeks later.

This seller had started at $184,900, and he was finally willing to accept $168,000. His home was technically worth $175,000 to $180,000 if you looked at comparable homes listed for sale.

Luckily I managed to negotiate a price with the second buyer for $172,000. If I had not proactively worked to reduce this listing’s price, then the listing would have expired on me just like the last agents.

That is why I work hard to reduce prices and communicate with sellers.

The time invested is minimal. I simply sit down one afternoon a week from like 4:00 to 5:30 PM. I can go thru 10-15 sellers in that time frame. I don’t spend more than 5 minutes on any one of them. It is little time compared with the work of getting a new listing to replace the one I just lost because they got mad at me.

And all of these sellers still like me and thought I did a good job when I am done. The short five minute conversations every week build a lot of rapport and makes them feel more comfortable and trusting of me as a person.

I have 3 basic things I do on every home that enables me to succeed.

1. Improve the showing condition of the home. A “staged” home will sell for 10-15% more than a home that isn’t staged.

A home in good showing condition (but not staged) will sell for 10-1% more than a dump. If you’ve ever wondered why REOs sell for less, then there is your answer.

2. Improve the marketing. I take better pictures and write better descriptions. I also do a real “marketing analysis” and figure out any marketing opportunities there are that the other agent has missed.

3. Reduce the price. This doesn’t always happen right away. Many sellers still think their home is worth the Expired Price. After years of working Expireds I have learned a very important lesson.

I can fight over price… and lose the listing. Or, I can get the listing, show them I am doing a good job marketing the home, and then fight over price. I’ve found the latter to be much more profitable. Don’t ask me how much money I have lost fighting over the price. It has to be one of the most expensive lessons I have ever learned.

4. Sometimes a problem is holding the sale back. Here are a few examples: A listing that only allows showings by appointment only, scheduled 24 hours ahead of time. A home with title problems.

I brought in a creative title attorney who resolved the problems. I’ve done this multiple times on different properties. Bottom Line: I’m a problem solver. I solve the problem and the home sells. Unfortunately, not all agents are problem solvers.

Can you see that the price isn’t always the reason the home didn’t sell?

So, why does my letter say that the reason homes don’t sell is because of bad marketing?

Because that is what most sellers think. Most sellers think the agent messed up. Or, the agent didn’t “stay on top of things.”

The seller’s perception is reality to them. In their mind, the story they tell themselves is 100% the unadulterated truth. They don’t want to come to reality about their price.